Inside Google: Eric Schmidt, the man with all the answers

As Eric Schmidt sees it, Wired is asking him entirely
the wrong sort of question.

Too controlled to raise his voice, too nimble to offer the record
an ill-judged retort, he nonetheless appears irritated to be asked
today about Google's regulatory challenges, its competition from
Facebook and Twitter, even the troubling matter of drawing revenue
to YouTube.

"You can ask me any questions you wish, but every question you're
asking is a negative question," he says a tad impatiently, while
picking at organic fruit 'n' nut mix in a conference room at
Google's London offices. "You're putting the questions into a
negative context rather than looking at it from the standpoint of
innovation and growth - which is how we think. Your questions imply
an industrial model and a limited model, but that's not in fact how
the world works. And Google is about taking advantage of this
enormous opportunity."

So YouTube, then (reportedly losing half a
billion dollars a year), attracts "an enormous, extremely large set
of people who are basically spending an awfully lot of time there,"
says Schmidt. "We will eventually figure out a very successful
business." As for Google falling behind Twitter in real-time
search, "I disagree with the premise of the question. We do not
operate under the Microsoft rules - that Microsoft has to control
everything. Twitter is a very important emergent social phenomenon.
It's very successful. And we think that's good, because it means
people are spending more and more time online. I don't see the
negative." And don't dare suggest that Facebook is increasingly
seen as a challenger for both advertising revenue and users'
attention: "There's some implications there that this is a zero-sum
game. Again, I just completely disagree. All of us benefit when
Facebook or Twitter get more users, because it means people are
spending more time online. And they're going to want search - which
is what we do really well. I disagree with the assertion in your
question. So maybe you should ask a different question."

Ouch.

So, one more try… Schmidt sees competition as healthy, then?

"Again, you're using an old mindset," he counters. "You assert in
your question that somehow they take advertisers away. That's not
how advertising works. Advertisers put their money in the most
effective ROI [return-on-investment]-based schemes so, for example,
if Yahoo and Google have excellent advertising systems, advertisers
will put money in both. Again, don't use the old industrial economy
terms: the internet is a model of ubiquity, not scarcity."

What the 54-year-old chairman will discuss happily is Google's
mission to solve all the world's problems. "I'm one of these people
who believes the way you solve problems is by investing in a new
solution," Schmidt reflects. "Almost everybody in the media and in
the political sphere are locked into some strong-held opinion that
hasn't changed and isn't going to change. So the way you solve that
problem is you invent a new thing. In governments, you invent
transparency - literally tell us what you're doing, what you did,
what you're going to do. It's the best way to have a functioning
democracy. In the case of individuals, it's the model where the sum
of what Google does becomes the third part of your brain - you
know, there's a left brain, a right brain and there's a third part
where that collective intelligence that Google can help bring to
you really helps you get through every day: the history of places,
what you should do, collecting things for you, telling you what's
relevant - the things that computers do best that humans are not
good at. And that will leave humans to spend more time doing what
humans do best, the things computers are not very good at.

"I like the emergence of - the marketing buzzword is 'collective
intelligence', the emergence of the sum of what Facebook, Twitter,
Google, the blogging sphere, what is really the beginning of a much
deeper understanding of what's really going on in the world. And I
find it fascinating that this is what's happening now, and Google
is in a position to find it, sort it, rank it, organise it in a way
that people who are busy can take advantage of. That's how we see
our customers go forward. And there's a lot coming."

Google may be at the heart of that future - but there is no grand
plan. "We don't have a big picture. We don't have a five-year plan,
we don't have a two-year plan, we don't have a one-year plan. We
have a mission and a strategy, and the mission is… you know, [to
organise] all the world's information. And the strategy is to do it
through innovation. It doesn't bother us if something doesn't work.
Because we understand that something else will work."
So what's next for Google? "The first question is, do you
think search is a solved problem? And we do not. We think there are
many, many things that can be done to improve search. Would you
like to be able to say to Google, 'What should I do tomorrow?' or
'Where are my car keys?' We're just at the beginning of answering
the really hard questions. We're good now at cataloguing, indexing
stuff that's already been written. But what about meaning, what
about understanding real intent? These are very, very hard
problems, and search is the way to access those."

The company changed its strategy two years ago from pursuing
"search and ads" to "search, ads and apps" - with huge technical
investment in the Android phone platform and the Chrome browser.
The business continues to grow fast: in its first-quarter results
for 2009, Google reported three-month revenues of $5.51 billion, up
six per cent on 2008.

Still, Schmidt accepts that the company faces "a whole bunch" of
challenges. "The first and most obvious is we are dependent on
targeted ads. So if the targeted ads were to be less successful,
for whatever reason, people stop clicking on them. We saw this in
our March quarter and we said this - people are clicking on the ads
less, or if they click on the ads they have been buying less than
they did. They have less money. So the auction price came down a
little." Still, Schmidt offers a characteristically optimistic
interpretation: "We saw that, in a perverse way, as a positive - it
proved that our auction was really working. The price would go up
when they're willing to pay more, down when they're willing to pay
less. So the auction has its own logic, and if the auction were to
go awry for a long period of time, that could hurt us. And as you
hinted earlier, if you hit a limit of attention, that could affect
us. You could also have verticals, highly specialised sites, that
could somehow attract 'monetisable queries', as they're called.
Obviously, we worry about Microsoft, because of their monopoly
position in Windows and their browser. And they've periodically
announced new versions of their search products, and let's see how
that goes. And we face daily competition from Yahoo." But from
Microsoft, clearly, in particular. "The reason we pushed on the
browser so hard was that, if one company controls the browser, that
company can really hold back innovation on the internet. So much of
the application logic functions in the context of the browser.
Mozilla is heroic here, because Mozilla really did establish... an
alternative to Internet Explorer."

Google's founders, Larry Page and Sergey Brin,
hired Schmidt in 2001 from Novell; a Berkeley PhD in computer
science, he had been chief technology officer at Sun Microsystems,
and was previously at the Xerox Palo Alto Research Center and Bell
Laboratories. He was widely seen as the pair's "adult supervision",
and they retain an unusually close corporate relationship. Now, he
says, Page and Brin "have grown up. Whatever they did not know as
26- and 27-year-old entrepreneurs just getting started, they have
learned. Probably the most material difference is that there are
now three grown-ups rather than one."

That relationship has proved probably the most productive of the
internet era, not simply in terms of business success - in March,
Forbes magazine ranked the wealth of Page and Brin at $12 billion
each, with Schmidt's at a mere $4.4 billion - but also the scale of
the trio's ambition. In last December's letter to shareholders,
Brin set out a few recent achievements: "Every minute, 15 hours
worth of video are uploaded to YouTube [recently updated to 20]…
Today, we are able to search the full text of almost 10 million
books. While digitising all the world's books is an ambitious
project, digitising the world is even more challenging. Beginning
with our acquisition of Keyhole (the basis of Google Earth) in
October 2004, it has been our goal to provide high-quality
information for geographic needs… Last year, AdSense (our
publisher-facing programme) generated more than $5 billion dollars
of revenue for our many publishing partners... In addition to Gmail
and Google Docs, the Google Apps suite of products now includes
Spreadsheets, Calendar, Sites, and more. In fact, more than one
million organisations use Google Apps today… Google Translate
supports automatic machine translation between 1,640 language
pairs…" Not forgetting Google's Android mobile-phone platform, its
Chrome web browser, its speech recognition technology…

Inevitably, that scale and dominance has brought accusations that
Google is monopolistic; that it ignores such niceties as copyright
law; and that it accumulates vast tranches of personal data without
clearly explaining its intentions. A regulatory backlash is well
underway: the European Union is investigating Google Books over
what the German government says are actions "irreconcilable with
the principles of European copyright law"; in April, the US Justice
Department began an inquiry into potential antitrust implications
of Google's book-scanning settlement. The US Federal Trade
Commission is looking into the legality of Google board members
Schmidt and Arthur Levinson also having seats on the Apple board.
The EU, which linked a review of Google's acquisition of ad-serving
giant DoubleClick with privacy concerns, has been aggressively
fighting what it sees as anti-competitive behaviour and recently
hit Intel with a $1.45 billion fine. And Christine Varney, the new
US Justice Department's anti-trust enforcer, made a speech before
the American Antitrust Institute last June in which she is reported
to have said that Google "has acquired a monopoly in internet
online advertising". "When all our enterprises move to computing in
the clouds and there is a single firm that is offering a
comprehensive solution," Varney is quoted as saying, "you are going
to see the same repeat of Microsoft."

This context may explain why Eric Schmidt has
been made available to Wired today for a rare in-depth interview
and an even rarer cover shoot. So for all its innovations, I ask
delicately, could Google, perhaps, be growing too big and powerful
for its own good? "Who determines that?" Schmidt fires back. The
regulators, maybe, if they are concerned, say, by Google's 72 per
cent share of the US search market, and almost 90 per cent in the
UK, according to Hitwise? Pause. "Again, it's helpful to have the
question." Hmm.

Can scale in itself be damaging to Google, as regulators start
prying? "No," Schmidt says firmly. "That's the clear answer. We
build Google for scale. If we were to begin to violate our
commitment to end users, then it would be another matter. The
easiest answer for that is to think about how easy it would be for
you to switch from Google to a competitor. It's one click away. So
it's very hard for us to use the kinds of tactics that get into
trouble with antitrust and other kinds of regulators. It's such a
competitive market, competitive in the sense that there's no way
for us to keep you if we screw up. We have to earn every
customer."

Yet the worry isn't whether the customer can go elsewhere, but
that the number of Google services its typical customer uses puts
vast amounts of personal data in the hands of a private company
accountable to shareholders, rather than, say, government
regulations. "I would argue that we are government regulated, in
the sense that on things like privacy there are plenty of laws we
are regulated by," he says. "Again, I would be careful about the
language. Because you're talking about a theoretical scenario.
Maybe you could ask a different… a more precise question."

OK... Let's try to be more precise. There are
suggestions that some politicians, in Washington and Brussels, are
looking to make Google their next target. "You're asking me to
speculate on the actions of governments, and they have not taken
them yet. One way to answer that question is to say, we have two
evergreen problems to worry about: one is privacy, the other is
regulation. Privacy because, in the course of doing what we do, we
get a lot of information about people. There's a long set of
answers as to what we're doing in the privacy area, and the
European market is particularly concerned about privacy. So
Europeans have tended to be in the lead on regulation and privacy -
log retention, the European data-privacy initiatives, these kinds
of things. The more general question of regulation would be
determined by which area you're speaking about. There are already
privacy regulations on the books. We are following them.

"So rephrase your question as, 'Are there other areas where we
could be regulated where we're not currently?' But... that's
speculation. Part of the way we answer those questions internally
is we say, look, we're not going to make the stupid mistakes that
Microsoft made, it's not part of our value system. We, for example,
make a commitment that if you're an unhappy customer, you can
simply move all your data to a competitor. We don't trap you.
That's a fundamental principle of the way we run the company - it's
run differently from the examples that you might want to
cite."

Still, some consumers feel that Google knows an awful lot about
them. What does Schmidt say to those concerned about the volume of
personal data held on Google's servers? "Firstly, there are ways
you can get that data taken off. Secondly, we are highly regulated
in those areas with respect to things like log retention, cookie
management, those sort of things. That strikes me as an appropriate
balance. The typical argument that comes out is, I don't want
Google to keep any of that information. Well, how do we decide what
the appropriate retention is? That's a political question, it's not
an end-user question. Because the government would argue that you
should have some retention for security reasons. So how do we make
that decision? Well, the answer is we don't - the government makes
that decision, and we follow the law.

"Google is not making its own rules here. In fact, almost all of
the companies in the information business have this problem, and
they all are subject to these laws. So I think you're much better
off having private companies subject to regulation in these areas
than somehow nationalising these companies and having them turn out
to be bureaucracies."
A day earlier, at Google's Zeitgeist conference in a
Hertfordshire hotel, Schmidt had argued forcefully that any
regulation would inhibit innovation. Instead, he argued, consumers'
best interests should be left to a company's "good judgment", its
"guiding principles" and the fact that "we're quite transparent
about what we're doing". I put it to him that, with respect, he
would make that argument, wouldn't he? "I like the credit of having
my own opinion and being able to state it publicly," he responds
sharply. "What's my alternative answer? I want the government to
manage Google? I don't know anyone who thinks that's the right
outcome. If you do, you can state it. It's better to understand a
question in the context of the possible choices. So choice (a) is
you have a private company that's subject to the laws of the
country in which it operates. That's Google. The second is the
government does it itself. Which do you think is a better outcome?
I don't think there's much debate. It's why capitalism won." He
laughs pointedly.

One issue with which journalists confronted him at Zeitgeist was
the privacy implications of Google's Street View service. Was he
surprised at some of the public reaction? "We were not," he says.
"Three or four years ago, I suspect we would have been. When we
first saw Street View, we knew that it would raise privacy
concerns. That's why we built the face-blurring technology. The one
that was a surprise - a mistake on my part, I guess - is I forgot
about licence plates. We had to invent the licence plate- blurring
technology a little later.

"Because we understand Google matters, and we understand that
there are people organised to pay attention to what we do, we now
plan for this. We plan the roll-outs, we plan the conversation, we
do the prebriefing, we talk to the people who, in our view, would
naturally be opposing us, to give them the benefit of the actual
data as opposed to something they might make up, and that seems to
help. Street View has largely gone well for us. Hugely successful,
people seem to be generally OK with it, and we think we have very
good answers for the concerns people have raised.

"Again, try to put it in a positive context. The benefit of this
is that there's now a very large collection of public data about
public places that didn't exist before. Same answer for Book
Search. Why are you scanning all these books? Because there's
millions of books that are now available to you that were not
available to you before, sitting here in your office or at home in
London. It's a big win."

But often - as with Book Search - Google is disrupting existing
interest groups… "I know…" And they will throw "Don't be evil" at
you. "The 'Don't be evil' is a signpost for us about how we should
make values-based decisions," he replies, "and we use as our
primary goal the benefit to end users. That's who we serve. The
question you ask can be understood in the context of 'Are people
complaining because we did a bad job for end users?' or 'Are people
complaining because the thing we did benefited end users better
than they did?' In that context, it becomes much clearer how we
navigate through this. The internet was not designed to be a
disruption-free zone. The internet was designed to connect the
world. In every industry it's touched, it's done that."

What, then, is Google's next billion-dollar business? "It's most
likely the display business," he reflects. "We're doing an ad
exchange. We bought DoubleClick. The success of YouTube is strong
in the display area. So if I were to predict, I'd say it's
probably, in order, display and then probably also mobile. Because
of the scale of mobile, and because it's happening so
quickly."

On a sunny May afternoon, in a hotel on the
outskirts of Watford, selected journalists invited to the Zeitgeist
conference see a demonstration of Google's latest smart search
innovations: universal search, Google Squared and Wonder Wheel, as
well as voice chat and live video chat through Gmail. After the
demo, Larry Page makes a confession. Twitter, he says, has "done a
great job of real-time search. I think we've done a relatively poor
job of... things that work on a per-second basis. I've been telling
our search teams for some time, you need results for every second.
They laugh at me. I don't think they understand this. I think we
will do a better job of some of these things now."

On the stage, among guests ranging from Richard Branson to Aaron
Sorkin, Page greets Schmidt warmly. "He's shown the power of
[hiring] slightly more mature people to counteract our healthy
disregard for the impossible with a little bit of reasonable common
sense," he tells the audience. He then talks about what has been
exciting him - the power of geolocation combined with mobile
devices. "I've been walking around the hotel with this newly
released thing [on my phone] called My Tracks, which records
everywhere you go. It's actually really useful - I don't know my
way around, but from the airport to the hotel I know where I went.
We're just at the early stages, what with this, with Street
View..." Schmidt interrupts: "It's just one controversy after
another, Larry!"

Schmidt explains how the partnership works. "One day, Larry and
Sergey and I were sitting in a room, and Sergey looked at us and
said, 'It's obvious what our strategy should be. It's to work on
problems on a scale that no one else can.'"

"I call this the toothbrush problem," Page
responds. "There's not many things you use as much as a toothbrush,
so you should be working on those things. Email's something you use
more than a toothbrush. We try to stick to the sorts of things that
really matter to people - and things that we think we can improve a
lot."

"Meetings where engineers propose projects that are derivative are
always very bad meetings," Schmidt says. "The meetings that are
interesting are the ones where, here's a new idea, here's a new
market, here's a new problem that can be solved that affects the
world. That's really how we see ourselves."

"You look at the problems," Page continues. "A couple of million
people around the world are in auto accidents. Do we really need to
do that? Computers are pretty good at doing things. In Las Vegas,
they had these cars driving by themselves, with no humans involved;
that's what's possible now. I feel we're not really doing a good
job of using technology to benefit humankind."

A journalist asks Page about privacy, specifically whether Google
still plans to keep search logs for nine months. "I guess I'll take
this back to pandemics," he replies, with impatient precision.
"We've shown with Flu Trends that we can detect a pandemic, where a
lot of people are starting to get sick, very effectively using
search queries. To tune those algorithms, we need a lot of
history.

"I personally believe that the fewer of those logs we retain, the
more likely we are to all die."
"That's an excellent question." It's one week later, and
Sergey Brin is, thankfully, in the mood to confront some tough
issues - in this case, when he expects a computer to pass the
Turing test and demonstrate intelligence equal to a human's. "We
have a lot of debates about that," he says, pouring mineral water
at San Francisco's XYZ restaurant, a block from the Moscone West
centre where Google is hosting its I/O conference for almost 4,000
developers. "Some people at Google say not for 100 years, but I'm
more optimistic. I'd give it 20 years. Partly due to the
improvements in technology. And partly" - he laughs - "to the
decline of humans."

For one of the corporate world's most powerful and wealthy
executives, Brin's stroll down 4th Street to the restaurant was
remarkably relaxed - no bodyguards, no passers-by recognising him;
just another young-looking 35-year-old guy in a T-shirt and tapered
jeans. If there's anything Google seeks to solve, he explains in
the restaurant, it's the vastly ambitious challenges that others
dismiss as irresoluble. "I feel like we have an obligation [to
tackle the big problems]," Brin says. "There are not that many
companies with the technical resources we have that would tackle
these things. When there are challenges that are viewed as
impossible, those are areas that we have almost an obligation to
pursue."

We are sitting with Vic Gundotra, Google's vice-president in
charge of engineering, who this morning shared the I/O conference
stage with Eric Schmidt to demonstrate not only the impressive new
functionality of the HTML 5 web protocol, but to announce, to a
standing ovation, that every delegate would be taking home a free
Android phone. Tomorrow he will unveil Google Wave - an
extraordinarily smart reinvention of email and social networking
that seems squarely aimed at toppling Facebook. Opposite Gundotra
is David Krane, 37, director of corporate communications and what
he calls "the corporate memory". He's a nine-year company veteran,
hired as employee number 84; to give an indication of the demands
of his job, Krane's in-box contains 189,726 emails (not counting
the 25,690 spams received in the last four days).

Brin is reflecting on how he has, just possibly,
resolved the major business challenge that is YouTube. "I've come
to a very inverse view of video," he says excitedly. "I used to
think of video as entertainment. It has high production costs, so
you'd produce a small number of videos but they could be
entertaining - which is basically what television is. And yet,
looking at YouTube, and more widely the evolution of video on the
internet, it's completely changed my mind. Because now YouTube to
me is a very easy and powerful way to communicate pretty much
personally might like certain types of sport - I like springboard
diving, that's an obvious thing you want to see on video. But even
surprising things - I bought this Raid hard drive array for my
house, and I was choosing a model, and a search popped up for a
YouTube video. I watched this, I saw it was really well designed -
and I bought the drives, and they're great. I'd looked up the
specs, and yet the video was very useful. Small local businesses
can increasingly use video - you could easily imagine restaurants
showing what they serve, people happily dining away, then you've
got a sense of the atmosphere.

"So in my mind now, it's really changed. Video is a perfect medium
for information about very narrow specialised things." With
YouTube, no doubt, as the tollbooth.

This is, clearly, a restless company. This
morning, in between demonstrations of the new Android phone's voice
search and webmail that works offline, it was announced that
200,000 developers have signed up to work with Google's App Engine,
leading to 80,000 new approved apps (Google Moderator, a free tool
for prioritising a meeting's agenda, has been taken up by the White
House). As for Google Wave, it lets groups share conversations,
photos, videos and maps in real time, with "smart" contextual
spell-checks and instant multiple-language translation. Is there
nothing that Brin sees as threatening Google's relentless
expansion? "Well, the limitations of our own imaginations is one
big threat," he says. "People tend to have narrow blinders as they
do more of the same thing, so that's very important for us
culturally." He pauses. "I think, perhaps, also our failure to
communicate clearly to the wider world what we're up to is
important. People out there misunderstanding our intentions."

Such as public concerns, say, about Google users' privacy?

"I'd argue that some of the things talked about, such as
[retention of search] logs, don't affect people's privacy," he
replies. "I'm old-fashioned. If information gets out about a person
that humiliates or embarrasses them or otherwise causes them harm,
that's a privacy issue. But I've never heard of a single case of
anybody being harmed by virtue of a search log."

Street View, he accepts, has greater potential privacy
implications than saving search logs. "Yet the number of cases of
embarrassment or whatnot caused by Street View are a handful - this
guy walking near an adult bookstore, not even necessarily stepping
outside; or somebody taking a leak… There were maybe a dozen such
things when we launched in the US, and I assume if you look very
hard you could come up with a few dozen. At the same time, people
are able to use this to navigate, to do real-estate shopping,
thousands or millions of times."

But surely, I counter, it's the sheer scale and breadth of
Google's ambitions that prompts such public concerns. "We happen to
decide to do new things, sometimes on a large scale," Brin
responds. "These efforts - Google Book Search, Street View, whatnot
- are making information widely accessible and useful. They're
ambitious: we don't tend to get scared by the numerous obstacles
that might get in the way of that, but it's all grounded in what we
absolutely believe - that it's going to be to the benefit of
people. I do think that getting millions and millions of books,
unlocking them for all the world's people - I think that's a very
noble thing to do that will help people. And Street View - it's not
quite the same as all the world's books, but it's nice for
navigation, for understanding, for travel. There have been examples
where people have used it to spot a crime.

"We have a fundamental philosophy with which we push these
projects - we really want to improve life for people. And I think
to date that we've been successful."

Gundotra says he's learned that engineering
breakthroughs are far more important to the founders than boosting
the bottom line. "With Larry and Sergey, if you make the mistake of
focusing on monetisation, you're quickly corrected," he says.
"Later we do think about the money," Brin adds, "but it's only
after finding something compelling and unique that also has
technical insight."

And yet… Google is increasingly criticised as an all-powerful
monopoly. Book publishers, for instance, saw it as blatantly
ignoring copyright law in its zeal to digitise every book. "Well,
the book publishing world, just for the record, they and we have
come to a very nice agreement, though I know at various times we
have disagreed," says Brin. "I mean, we work things out. There's
always going to be a certain amount of disagreement, but I think
broadly, whether we look at newspapers or whatnot, we're actually
all on the same team. There may be some queries about should this
be open or closed, ad-supported or not, opt-in or opt-out... but at
a high level we have the same goals. We're trying to get
information out there and have sustainable revenue models, and
hopefully having people's lives... improved through access to that
information.

"I think sometimes these debates get highlighted in the media
disproportionately. When people criticise us, they tend to get
press. You look at the average privacy organisation, they'll be
quoted in all the newspapers. But the fact is, we work with privacy
organisations all the time. And we work with publishers all the
time: we have billions of dollars of revenue flowing both ways with
publishers. The media reports, they take out of perspective the
actual amount of work that we do with all these people."

How big, then, does he see Google growing? "Well, 20,000 [staff]
is relatively small compared to some of the largest companies
comparable to us in revenue and the numbers of customers, users,
whatnot. That said, our headcount has been relatively stable for
the past few quarters. We'll see. I don't know exactly which way
it'll go. We're not constraining it to 20,000 employees, but we do
depend primarily on third parties, other developers or publishers
out there. We don't intend to build everything ourselves."

So is Google still a search company - or
something broader, becoming, say, a media company? "I'd say we're a
technology company," Brin says. "Still, the overwhelming majority
of our effort goes into search and advertising, but part of the
reason that we work in some of these areas is we need them to
improve, in order to deliver a good search experience. The mobile
web with Android, pushing the HTML 5 platform for all these phones,
is because we have a very hard time delivering good search
experiences to phones. It's hard to develop the applications, to
get carriers to accept them, so we felt we needed to innovate in
that area, to break down barriers to a good user experience. With
Chrome, the limitations of the browser we were running into were a
problem."

Gundotra interrupts. "Google isn't only a technology company, it's
a brave technology company," he insists. "A lot of these examples
Sergey just mentioned - the idea that you would go and innovate,
and just give that product away, that's pretty brave. Chrome's open
source; Android's open-source. It takes a lot of bold
thinking."

As with all the senior Google executives that I meet, Gundotra
seems genuinely to be on a mission to resolve the world's
inefficiencies - an endless coding challenge that appears to
transcend mere business opportunism. And he and Brin appear
remarkably relaxed, considering the breadth and sensitivities of
our discussion points.

Take Twitter, which Larry Page admits has left Google trailing in
real-time search. Does Brin see it as a potential Google
acquisition? "We do talk to everybody," he says, giving the
corporate line, before reflecting aloud on how it was Evan Williams
- co-founder of Twitter and of Blogger (which Google bought) - who
made it a "win". "The interesting thing to me about Twitter is that
it shows that an entrepreneur can make a difference," Brin says.
"It's not like Twitter is the only thing like Twitter, or Blogger
was the only thing like Blogger, yet Evan made both quite
successful. I'm sure there are lots of little decisions about how
he crafted both. It speaks to real entrepreneurship in a leader. I
wish nothing but the best for Evan, certainly I wish he'd stayed
longer with us." So will he be back? "I'd welcome him back. He's a
good guy."

Conversation turns to how far Google sees Twitter and Facebook as
a threat. "Actually, a recent study I saw showed that people whose
used Facebook tended to do 15 per cent more searches on Google than
people who did not," Brin says.

Gundotra nods. "When my wife and I have put the kids to bed, we
ask, 'Do you want to Facebook or Google, or do you want to turn the
TV on?' It's a generational shift - we can do an hour on the
internet, sitting in bed together, going from Facebook to
Google."

Brin interrupts: "You could just poke her!" He grins.

"I'm the same," says Brin. "My wife and I will IM [instant
message] each other when we're lying next to each other in bed,
because if you're working, that's what couples do." He turns to
Gundotra. "That's a little embarrassing. Maybe we can sort that one
out through HTML 5."

Outside the Googleplex, on a scorching Mountain
View afternoon, a Street View car is making eerily regular circuits
of the block, Truman Show-like. In the lobby of Building 43,
posters promoting the Technical Insight and Innovation Initiative
encourage software engineers to reflect on the questions: "What
will be possible when the web is 100x faster?" "What if your
browser had five senses?" Real-time searches from around the world
(pre-filtered to omit pornography) are projected on to the
reception wall: "Bingohotspot… Hot Arab girls… Bank of America…
Jennifer Aniston pregnant… Horcas banda…"

Below a life-sized replica of Space Ship One, a sign advises
Googlers to "drop off all your dry cleaning, laundry, alterations
and shoe repairs here". Like the catered organic food and the
in-house medical facilities and swimming pools, there is no
charge.

David Krane leads Wired on a tour of the senior engineers' yurt
shaped offices, made from sustainable materials and decorated in
low-VOC paints. The roof's solar panels, he says, produce 1.6MW,
making this second-largest system in the US. Staff can recharge
their hybrid electric vehicles cars with solar power, which now
accounts for almost a third of the Googleplex's electricity
usage.

For all its success, this remains a young
company: 30.1 is the median age, Krane explains. And, although
recruitment has slowed from the hiring peak of 150 people a week,
125 more have been taken on over the past three months, although
300 more, mostly in recruitment and sales, have been "eliminated"
in the last half-year. Still, all 10,000 staff here, plus the other
10,000 elsewhere in the world, are invited virtually to an
hour-long staff meeting with the bosses each Friday. Google
Moderator determines which questions will be answered, based on a
collective vote.

As we talk in the canteen, Schmidt and Brin pass through
separately and help themselves to the buffet. Brin and Page, I
mention to Krane, once had a reputation as obsessively hands-on
when it came to every engineering project. Now Google's a giant,
surely that has evolved? "No change," replies Krane.

Without directly addressing what may have led Google to offer
Wired such unprecedented access, I ask Krane how anxious the
company is about the growing antitrust rumblings. "It's one of the
chief concerns we're focused on right now," he says. "We know that
in the grand scheme of things we have very little lock-in with our
users. A competitor is merely one click away." Exactly the phrase
that Schmidt had been primed to use. "I'd be surprised," continues
Krane, "if for the next few years significant attention at all
levels within the company wasn't given to ensuring that we do the
best that we can to be as transparent as possible, to allay fears,
to assure the community that watches Google that we have good
intentions and intend to make a difference. Some factors out of our
control tend to exacerbate the criticism. There's a fair amount of
envy. And… many of these traditional industries don't have a
product-development model that runs anywhere near the pace of
Google's."

Those efforts are no more evident than in the projects run by RJ
Pittman, a 39-year-old serial entrepreneur snapped up by Google two
years ago to run its Google Labs experimental platform. As Pittman
sees it, search is about to explode into "a new level of contextual
specificity". He explains: "If I'm standing in front of Building
41, and I say what's the weather going to be like tomorrow, it will
take account of where I am, what the weather's like today; and
maybe the search will be contextualised, based on where I've just
been, folks I've just had a conversation with. It becomes much more
targeted [and] changes from being search to [discovering] how the
world's thinking. There's a real value to the world here."

In the shorter term, Pittman is excited about the growing power of
his team's image-recognition technologies ("looking at the pixels
in the image in a variety of contexts to find other related
images"), better ways to aggregate the "real-time" web ("it's a big
search opportunity"), and new methods of indexing audio in online
video to make it searchable. He also sees smarter search
intelligence delivering bigger short-term wins. "It's not out of
the question that, as we've used search volumes to identify flu
outbreaks, down to the municipality level, that you can measure
consumer sentiment - spending money, happiness. It's a new frontier
for us. I call this turning search inside out."

He adds: "The biggest question you get from management is, are you
thinking big enough?"

Still, Google is not infallible. Even Eric
Schmidt accepts that. "Firstly, we're not perfect," he says with a
polite smile. "It's very important to say that we make mistakes.
Given that you're going to make mistakes, do you learn from them?
The right question to ask is, 'What did you learn from print and
audio?'," ad businesses from which Google withdrew. "And what we
learned is that we should be in businesses where we can get a
positive feedback cycle from the advertisers and the value of the
ads, and we couldn't get a strong enough signal in the radio
business. We couldn't tell well enough which ads were working to
make the ad model really work well. So that's a lesson that we
learned and we'll... apply that to the future. If we have any sort
of outages, we learn from those - they're rare, but they can
occur."

From conversations with his close colleagues, it becomes clear
that Schmidt is far more than the corporate strategist and
troubleshooter, the business brain, the "grown-up" tasked with
engaging with the world while his engineers lose themselves in
code. "Eric's actually been driving a lot of the technical insight
recently," Brin explains. "Pushing that the products we release
should not just be useful in themselves, but they have to have some
technological achievement. He's been pushing that more than even
Larry or I."
So there's one technical challenge I'm curious to know
whether Schmidt is any nearer to resolving. How, as the
Google-enabled internet is ravaging the business models of
traditional news providers, can it help keep them alive? "We don't
know how to deal with the newspaper problems involving the loss
of... print ads," he says bluntly. "If we had a solution, we would
offer it - but we've not yet come up with a good solution
there."

He is, however, optimistic that the traditional news business can
be saved. "It will certainly be saved, but it will be in a somewhat
different form. The fundamental problem is the news industry has
this strange bargain where the traditional print ads and
classifieds paid for investigative reporting, which was highly
valuable and very expensive. But it's very hard to advertise
against 'murderer' or 'war'." He laughs. "So it's a funny kind of
packaging problem.

"I want to be modest with respect to what we can do, and I believe
this will be a problem that will take quite a long time to be
resolved." Still, he has a possible solution in mind. "We think
that the next generation of display ads, which are derivative of
[our] DoubleClick acquisition, will probably... be much more
lucrative for the newspapers. The rough story goes like this:
people are moving from offline to online. It's more instantaneous,
it's more personal, it's more targeted, and it will be monetised
with these higher quality display ads."

But with newspaper executives such as the Wall Street Journal's
Robert Thomson denouncing sites such as Google as "tapeworms" (and
Rupert Murdoch declaring an end to free online news: see page 40),
can he bring them on board? "Well, we've talked to a lot of them.
And it's important to establish right upfront that we operate with
their permission. Because there's a way in your website, using the
robots.txt file, for you to say, 'Hey, don't take my content'. They
all know this. So it's not that somehow we're stealing. Instead, we
think we're driving traffic to them, and the problem that they have
is that if it does not replace the revenue they've lost from other
sources - if we can find a way to get that up, then everyone will
be happy."

So finally, what excites Eric Schmidt at the moment? "The tactical
answer is that the global financial crisis is behind us. And though
I don't know what the recovery will look like, there's a bottom and
there's the beginning of a step up. Even here in London I think the
mood is better, just as you move down the street."

Besides, even amid crisis, the innovators among us can be relied
upon to devise a solution. "The thing that's lost in all this
'economic depression' conversation is that there is a path out -
and that path is to invent new things. And innovation in many
things, not just technology, is how you solve most of the world's
problems. So we take our job as to be innovators, and we are
failing if we are not innovating quickly enough. We've got a lot of
innovation coming. A lot of new applications and uses for the
mobile area, a lot of interesting things in search, a set of new
initiatives in advertising; and we've got some 'oh wow' stuff
coming. I'm very excited."